ShipRecycling Pages:

27 March 2014

China shipbreakers face difficult year ahead

China's shipbreaking sector is expected
to face a difficult year ahead as the country's domestic scrap prices continue
to fall, reports said.

Factors that would contribute to
potential losses for the shipbreaking industry in 2014 include government plans
to limit steel output, lower ferrous scrap demand, high purchase prices for
unwanted vessels and a steady decline in scrap prices, the China National
Shiprecycling Association told Platts.

The association said its member companies
have a high inventory of around 500,000 tonnes of unsold ferrous scrap at the
end of 2013, suggesting that shipbreakers were struggling to find demand from
the market.

China's stricter environmental standards
have also raised costs for domestic shipbreakers, making China less competitive
against other major ship demolition markets of Bangladesh and India, the
association was reported as saying.

China's ministry of transport had
announced in December last year a policy that will offer subsidies of RMB1,500
($247) per gross tonne to shipping companies that scrap their vessels before
their operational expiry dates.

The subsidies would be given in two
tranches – one upon the completion of the vessel demolition and another after
the construction of the new replacement vessel.